More Pharmacy Chains Closing In NJ: What’s Behind It?

NEW JERSEY — Drugstore chains Walgreens and Rite Aid announced a slew of pharmacy closings this week, creating more uncertainty among New Jersey residents about where they’ll get their prescriptions filled as pharmacy deserts become more common. CVS is also shuttering stores.

Chain pharmacy executives have cited a variety of reasons for closing stores in New Jersey and other states, including reduced spending by inflation-weary customers, low reimbursement rates for pharmacy care and low dispensing fees for Medicaid enrollees.

Also, they have said, current business models are outdated in an environment of increased competition from stores that sell much of the same merchandise, and pharmacies are still adjusting to a spike in demand for services during the COVID-19 pandemic.

New Jersey has lost dozens of pharmacies over the past few years.

Here are the closings big pharmacy chains have announced:

• Walgreens plans to close a “significant share” of its 8,600 U.S. stores nationwide to turn around its struggling pharmacy model. In an earnings call with investors Thursday, Walgreens Boots Alliance CEO Timothy Wentworth said as many as 25 percent of the stores — about 2,150 of them — could close. That’s on top of about 2,000 stores the Deerfield, Illinois-based chain has closed over the past 10 years, 484 of them since February.
• Rite Aid, struggling under billions of dollars in debt and more than a thousand federal, state and local lawsuits accusing the chain of illegally filling painkiller prescriptions, said in court filings that it will close another 27 stores in two states — or virtually all of its Michigan and Ohio pharmacies. That’s on top of the nearly 500 stores the chain has already closed.
• CVS has shuttered about 600 stores since 2022 and plans to close 300 more this year. The closings “are based on our evaluation of changes in population, consumer buying patterns and future health needs to ensure we have the right pharmacy format in the right locations for patients,” CVS spokesperson Amy Thibault said in an email to CNN early this year.

What Does That Mean For New Jersey?

An Associated Press analysis in early June shows 2,023 retail pharmacies, or about 0.22 per 1,000 people in New Jersey.

There are greater concentrations of pharmacies in the cities — Newark has 0.69 pharmacies per 1,000 residents, for example — but areas along the coastline have right around the state average.

In Ocean County, where nearly a third of the population is age 65 or older, pharmacy closings have left many residents nervous. In Toms River, two Rite Aid pharmacies have closed in the last year, and there have been others closed in Manchester and Barnegat. CVS and Walgreens also have closed locations, but there remains about 0.22 pharmacies per 1,000 residents in the county.

Rural areas have far fewer options, with some portions of Hunterdon, Warren and Sussex counties lacking any pharmacies, according to the Associated Press analysis.

Whether independent or a chain, pharmacies can be important assets in their communities. They are health centers where the pharmacists and staff know everyone’s names and the drugs they’re taking, and often can spot signs of a serious illness. These local businesses are often stocked with supplies such as catheters, colostomy supplies and diabetes test strips that people need to stay in their homes as they navigate serious illnesses.

The AP analysis focused on rural communities, finding the gaps are greatest in those states. An earlier study by University of Southern California researchers found that Black and Latino neighborhoods in 30 large US. cities had fewer pharmacies than white and diverse neighborhoods from 2007 to 2015, before the current wave of pharmacy closings.

“If you’re located in a low-income neighborhood, and effectively in a Black and Latinx neighborhood, having any pharmacy is less common. And having a pharmacy that meets your needs is much less common,” Jenny Guadamuz, a co-author of the study, told CNN.

Can New Jersey's Independents Close Gap?

New Jersey's 848 independent pharmacies face their own set of challenges and are likely unable to fill pharmacy voids, according to the National Community Pharmacists Association, a trade group that represents more than 19,400 independent pharmacists.

The group said in a statement earlier this year that new Medicare and Medicaid rules resulting in lower prescription reimbursements, in particular, put a third of independent drugstores at risk of closure and that “millions of patients could be stranded without a pharmacy.”

In 2022, New Jersey's independent pharmacists filled 56.15 million prescriptions and generated more than $3.58 billion in revenues, including $3.32 billion in medication sales. They employed more than 10,000 employees.

The impact extends beyond the revenue at the pharmacies. Employees of the pharmacies spend their income locally for the most part, generating $2.37 billion in economic impact in 2022 in their communities, according to the National Community Pharmacists Association.

Patients suffer when pharmacies disappear.

“You can think of a closure as a disruption of care,” Guadamuz, who is an assistant professor at the UC Berkeley School of Public Health, told CNN last fall. “You had a routine: You would go to a pharmacy that was geographically accessible — ideally affordable — and was probably preferred by your health insurance plan. And then that pharmacy is no longer there.”

When CVS announced suddenly last March that it planned to shutter the store in Herscher, Illinois, a village of about 1,500 located 80 miles south of Chicago, the town’s mayor met with executives and asked them to at least delay the closure. CVS execs told the mayor the front of the store wasn’t making enough money, the Associated Press reported.

Pharmacy access is an important consideration in decisions about store closings, CVS spokesman Matt Blanchette told the Associated Press, but the company also looks at local market dynamics, population shifts and competition from stores selling the same over-the-counter products, he said.

The Associated Press contributed reporting.